African Insurance Market Headed for Greater Heights
The 42nd African Insurance Organisation (AIO) Conference was held in Tunis at the end of May and covered in particular the possibility of insuring political risks.The 42nd African Insurance Organisation (AIO) Conference was held in Tunis at the end of May and covered in particular the possibility of insuring political risks.
The conference attracted over 1,000 delegates from various countries to discuss the theme “African Insurance facing mass events”.
The insurance sector is very underdeveloped in Africa, with a penetration rate of around 3.5 per cent, compared to 6.5 per cent worldwide (“Insurance in Africa”, KPMG, 2012). Moreover, premiums are highly concentrated, with the biggest insurance market on the continent, South Africa, constituting more than 50 per cent of premiums (around US$ 54 billion).
However, coverage is expending fast: premiums grew by more than 35 per cent between 2007 and 2013, according to the African Insurance Regulation Directory (May 2015). Africa is indeed the fastest growing insurance market in the world.
One key presentation was on "increasing frequency of Political Violence in Africa and its involvement for the insurance industry." Regional Managing Director Middle East of UIB London Mohammed Kotb presented a case study of the amounts paid by insurers during the Egyptian revolution in 2011. Although political risks are typically excluded from insurance contracts, special coverage for these risks can be arranged. According to Mr Kotb, a capacity of around US$ 2.5 billion already exists for this type of coverage.
Other presentations covered the risks of natural catastrophes, infectious diseases and internet security.